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https://smallbusiness.chron.com/analysis-retail-apparel-industry-70514.html

Analysis of the Retail Apparel Industry by Barbara Bean-Mellinger; Updated June 26, 2018

Flexibility and Willingness to Change Is the Key to Success

What Exactly Is Apparel?

Strictly speaking, apparel is defined as clothing. But when talking about the retail apparel industry,

typically, apparel includes day wear, evening wear, underwear, sleepwear, shoes, purses and various

accessories such as belts. It also includes high-end luxuries, such as cashmere and fur, as well as sweats

and active wear. Although retail clothing stores often sell jewelry as part of their accessories, jewelry

isn't considered part of the apparel industry.

Example:

A store like Macy's, which sells a lot of apparel, is still a department store rather than an apparel

store. So, when talking about the apparel industry, only the apparel portions of Macy's sales would

be included, such as women's apparel, men's apparel, children's apparel, shoes, handbags, belts,

underwear and lingerie.

The Amazon Effect

The retail industry is abuzz with what some call the "Amazon Effect." This is the effect of not only

online shopping, but also the consumer trend of shopping with a behemoth such as Amazon, which

tries to be all things to all people -- and Amazon does a pretty darn good job at that.

But Amazon has also spurred other online shopping. Consumers who shopped on Amazon also

started looking at other online retailers and then they shopped there, too.

Still, the effect of online shopping on apparel retailers is relatively small. According to the Pew

Research Center, 79 percent of Americans have shopped online. However, only 10 to 15 percent

say they shop online one or more times a week.

Example:

Most people say they prefer to shop in a physical store. If an apparel retailer offers online shopping,

though, it needs to be a good experience for shoppers. Amazon makes shopping quick and easy.

Navigation is easy, searching is fast, and they offer fast, free shipping through their Prime member

service. So apparel retail websites need to be easy to navigate, fast, easy to search, easy to pay

with numerous options and offer free shipping of some kind (often, with a purchase of a certain dollar

amount).

Changes in Consumer Lifestyles

Maybe it's the instant gratification consumers have become accustomed to, but some shoppers just

don't want to go into brick and mortar stores any more. By the time they drive there, fight traffic, park,

walk in and find what they're looking for, they could have stayed cozy on their couch, searched many

online sites for price and product comparisons, paid for it, and moved on to playing video games.

As a result of this lifestyle change, malls have suffered. And when department stores go out of

business in a mall, the smaller retailers lose the customers who are wandering around in the mall

and who make additional stops after shopping in the department store. Apparel stores are among

these smaller retailers who lose business in this manner.

Example:

McKinsey and Company, in their report, "The State of Fashion 2018," as well as other forecasters,

predict that retail stores -- including apparel stores -- will continue to close. There are simply too

many of them to be supported.

Millennials Want it All

Whether they're shopping online or in a physical store, Millennials -- defined as consumers who are

ages from 22 to 37 -- have high expectations for their purchases. They want a pleasant, customer-

based shopping experience with their ideal outcome. They don't want to waste their time, and they

don't want to overspend. And, unfortunately for apparel retailers, this group isn't fiercely loyal to

brands.

Example:

Millennials, who are quickly taking over the shopping decisions, expect:

 High quality products

 Good prices; two-thirds will switch brands for a 30-percent discount

 Speed: fast shopping experience, apparel available, fast delivery if online

 Good customer service resolving issues or helping them to shop

 Companies to align with their values, such as eco-consciousness, fair trade practices, ethical

treatment of animals and employees

Optimism for the Future

In spite of the industry's challenges and its recent ups and downs, analysts are optimistic for the

near future of the retail apparel industry. They expect modest growth in both U.S markets and in

mature European markets. However, for the first time, it's expected that most of the industry's growth

will be outside of the West.

Example:

Predicted growth in the apparel industry in 2018, by region:  U.S. mature market: 1 to 2 percent growth

 European mature market: 2 to 3 percent growth

 Asia-Pacific mature markets: 2 to 3 percent growth

 Latin America: 5 to 6 percent growth

 Middle East, Africa: 5 to 6 percent growth

 European emerging markets: 5.5 to 6.5 percent growth

 Asia-Pacific emerging markets: 6.5 to 7.5 percent growth

Apparel retailers that succeed will be those that remain flexible in as many areas as they can. One of

the most important places for flexibility is in the supply chain, analysts say. Retailers that can react

quickly when consumer tastes change, and can deliver the products consumers want quickly, will

experience the greatest growth.

For some people, buying apparel is simply a necessity to be performed only when clothes wear out.

For others, shopping for clothing and accessories is a very enjoyable, regular part of their existence.

They live for what they're going to wear to work each day, as well as to soirees afterward, to

weekends in the country and on cruise vacations. These are the shoppers that keep the retail

apparel industry going. But how is it going? Apparently, it's not all doom and gloom. However, the

apparel retailers that are successful are those that leverage their strengths, embrace the changing

trends and use these techniques to their advantage.